Gold Exploration and Development October 2014 www.argusmetalscorp.com

October 2014
Gold Exploration and Development
www.argusmetalscorp.com
DISCLAIMER
The Company expressly warns readers not to rely on the information
herein for investment or other related purposes. Accordingly, any use
of this information is at your risk and without liability to the company.
The information contained herein is not and should not be construed as
either a public or private offer or solicitation to purchase securities in the
capital stock of Argus Metals Corp. The reader is referred to his/her
professional investment advisor regarding investment or related
decisions respecting the securities of the Company. Michael Collins,
P.Geo. is the Qualified Person with respect to the Yanamina Gold
Project.
All pricing is in USD unless otherwise noted
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CORPORATE STRUCTURE
Management / Directors
Michael Collins, P.Geo.,
President, CEO
Paul D. Gray, P.Geo.,
and Director
Director
Fred Tajada,
Director
Len Harris,
Director-elect
Stephen Stine,
Director-elect
SHARES OUTSTANDING:
7,932,067
Fully Diluted1:
9,687,817
Significant Holders
Options/Warrants
Board and Management ~24%
Stock options: 155,750 @ $3.37
Warrants:
Total
Simon J. Anderson,
CFO
1
1 ,600,000 @ $0.10
1,755,750
As of June, 2014
*Approximately 5.4 million shares will be issued to Coronet Metals to the approval of the TSX Venture exchange.
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CORPORATE OBJECTIVE
Argus focused on developing shareholder
value through the identification, acquisition
and development of near term gold
production projects.
These projects must have low capital
expenditure, low operational cost
production profiles1.
1 With exploration upside.
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OPPORTUNITY IDENTIFIED
Yanamina Gold Project, Ancash, Peru is an advanced-stage project with a NI 43-101 PEA
level resource.
• 924 hectares in 5 concessions
• NI 43-101 resource is based only on the Upper lense.
• Gold and silver intersections in footwall lense are consistent but to widely spaced to
calculate a resource at this time.
• Both lenses are open to expansion north, south (maintaining 1:1 Strip Ratio) and down dip
Summary Mineral Resources – Yanamina Gold Deposit
(0.5 g/t Au Cutoff)
Resources
Tonnes
Grade (g/t Au)
Total ounces
Indicated
1,567,000
1.65
83,100
Inferred
3,235,000
1.19
123,700
June 2014 NI 43-101 Technical Report, Prepared by Southampton Associates Inc.
• Present resource grades range between 1.20 and 1.70 g/t Au and up to 7.00 g/t Ag
• Resource estimate determined from 3,402m of drilling from 78 drill holes.
Disclaimer 1 The economics of this study are preliminary in nature and these numbers may change. There has been no
decision to go to production. This transaction is subject to the approval of the TSX Venture exchange.
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DEAL SUMMARY
Argus is buying 100% of the Yanamina project through:
•
40% of Argus shares following closing of the sale –subject to stage gate escrow terms.
•
Coronet will further have a right to invest up to 40% of any future equity offerings up to the earlier
of the commencement of production or 5 years AND appoint 2 directors to the board until start of
production or 5 years.
•
Argus will assume certain obligations, (USD $5.5m cash and USD 1m in shares) to the underlying
vendor that are triggered by stage gates in the process if bring the deposit into production.
•
The agreement may be unwound by Argus’ choice in the first year and Coronet election in the
second third year if there is not reasonable progress in developing the project.
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Preliminary Economic Assessment
In June 2014, a Preliminary Economic Assessment ("PEA") on the Yanamina Project was
prepared for Argus by Southampton Associates Inc1. using a gold price of $1,250 and a silver
price of $18.00
Yanamina Gold Deposit
Discount Rate (%)
Net Present Value (M)
Summary of 2014 Peliminary Cash Flow
2.5
5.0
7.5
10.0 12.5 15.0
51.9 44.7 38.6 33.3 28.6 24.6
•
Treating 4,802,000 tonnes of ore grading 1.34 g/t gold and 5.65 g/t silver with heap leach recoveries of 73%
gold and 40% silver with projected production of 151,000 oz gold and 349,000 oz silver at a cash cost of
less than $ 350/eq oz gold over a five year mine life.
•
•
Initial annual production of 41,000 oz gold and 95,000 oz silver
average production of 30,000 oz gold/year and 70,000 oz silver/year over the mine life.
•
Capital expenditures (including working capital) estimated to be under $40 million and the payback is 1.49
years from the start of operations.
The PEA was based on a 5 year 1:1 stripping ratio open pit mine, a 3,000t/d heap leach operation and a
US$6.5 million reclamation and closure cost.
1 The economics of this study are preliminary in nature and these numbers may change. There has been no decision to go to
production
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Yamamina Location
•
Located in the Ancash approximately 482km by paved and all weather road north of Lima and
approximately 16km east of the town of Caraz.
•
Daily flights from Lima to Huarez airport, 61 km by road south of the Project.
•
Situated 40km north of Barrick Gold’s Pierina (7.5 million oz Au) and 120 km south of Barrick Gold’s Alto
Chicama / Laguna Norte (9.1 million oz Au) mines. *February 2011 NI 43-101 Technical Report, Prepared by Southampton Associates Inc.
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Yamamina Proposed Infrastructure
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THE ARGUS TEAM
•
Argus Board and Management have the depth of experience in Peru and in Project development to
address community issues raise requisite funds, as well as supervise and execute a definitive
feasibility and mine construction plan.
•
XPM Global Consultants have proven track records in executing community agreements in Peru
and the Ancash Department in particular and will be focused on implementing mutually beneficial
agreements Argus and local communities.
•
Mining Plus has 75 professional Geologist, Engineers and Project Managers who will work with
Argus to bring Yanamina into Production effectively and efficiently.
•
Initial Surveys indicate the majority of the residents in the three communities immediate to the
Project are in support of development of the Yanamina Gold Mine, and moreover, Community
leaders have requested immediate the Company to reach agreement on the development of the
Yanamina Gold Project.
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YANAMINA DEPOSIT POTENTIAL
•
The Yanamina deposit consists of 2
lenses
•
The upper lense contains the compliant
resource and is open to expansion on
strike and at depth
•
The lower lense contains intersections of
similar tenor mineralization and over a
similar areal extent but does not have
the drill density to define a resource at
this time.
•
Both lenses are open to expansion north,
south and down dip
*abstracted from the June 2014 NI 43-101 PEA Technical
Report
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ARGUS OPPORTUNTY
The Yanamina Gold Project is a near term gold producer target that is right sized for todays market.
The Yanamina deposit and the footwall zone can be seen in outcrop at surface and there is significant
potential to grow the Yanamina deposit and the associated un-resourced footwall zone down dip and along
strike to the north and south.
The October 2014 PEA indicates:
•IRR of 49% at 7.5% discount rate
•Low capex =
$38.8m
•Low opex =
$350 / oz Au
•Good infrastructure and simple design will allow for a quick development process on a production
decision.
Optimization work in the next level of study will focus on resource infill and expansion drilling, contract
mining trade off studies, modular structure design, optimized metallurgy and processing and reduced
pricing for off the shelf heap leach equipment.
It is not unreasonable to expect that these areas will deliver higher production at reduced cost and improve
the already enviable economic viability of the Yanamina deposit.
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Thank you
From
Argus Metals
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Board of Directors Bios
Michael Collins, P.Geo.
Position: Director, President and CEO
Michael is the Vice President North America with Mining Plus Canada Ltd., a specialized underground and surface
mining engineering consulting company. Over the last 18 years he has developed a strong skill set in mineral
exploration, deposit modelling and project development. Michael graduated with a BSc. Honours from Dalhousie
University in 1996, and was granted professional status from the APGO in May of 2003 and from APEGBC in March
2012. Companies and projects of note include production and exploration at the Red Lake Mine with Goldcorp,
exploration work on the South Raglan project in the Ungava Peninsula with Canadian Royalties and a Syndicated
project review in China in 2004. His work has also taken him to such diverse environments such as East Africa, Central
and South America and Southeast Asia.
Mr. Len Harris,
Position: Director -pending
Mr. Len Harris retired in 1995 from acting as President and General Manager of Newmont Peru and President and
General Manager of Newmont Latin America. Mr. Harris has been a director of Coronet since 2012; of Sulliden Gold
Corp. since September, 2003; of Solitario Exploration & Royalty Corp. since June, 1998; of Cardero Resources Corp.
since February, 2000; and of Carnac Resources Corp. since June, 2001. Additionally, Mr. Harris is the Chair of
Resource Development Inc., Director Emeritus of Endeavor Silver Corp., President of B&A Mine Services, a director of
JVS Ingenieros, a consultant with H&H Metals Corp., with Indico Resources Ltd., with Golden Arrow Resources Corp.
and with Consultant Minera Titan del Peru, as well as an advisor with Vena Resources Corp.
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Board of Directors Bios
Mr. Stephen Stine
Position: Director pending
Mr. Stine is a mining executive with 39 years of experience in public/private company formation, acquisitions,
turnarounds, debt and equity financings and mine operations around the world. Mr. Stine joined Coronet as a Director
and COO in June of 2011. Mr. Stine is a co-founder and former director of Alamos Gold where he served as COO in
charge of exploration and production. Mr. Stine previously worked for Southern Peru Copper in Peru and speaks
Spanish. Most recently, Mr. Stine acted as Director and COO of Etruscan Resources where he was responsible for
turning around the Youga Gold Mine in Burkina Faso, West Africa. During that time, the mine doubled production and
the cost of production was reduced by 50%.
Fred Tejada, P.Geo.
Position: Director
Mr. Tejada is a professional geologist, registered in British Columbia. He has 30 years of international mineral industry
experience and has a proven track record, working with both major and junior mining and exploration focused
organizations. Mr. Tejada was Country Manager for Phelps Dodge Exploration Corporation in the Philippines with
responsibility over corporate and technical matters, development of exploration strategy and acquisitions. Mr. Tejada is
President of Tirex Resources Ltd. and previously held the position of Vice President for Exploration of Panoro Minerals
Ltd. where he directed the resource definition drilling of its two major copper projects in Peru. Mr. Tejada is also active
as a director with Green Arrow Resources Inc., Jager Resources Inc. and High 5 Ventures Inc.
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Board of Directors Bios
Paul D. Gray, P.Geo.
Position: Director
Paul D. Gray holds a Bachelor of Science (Honours) degree from Dalhousie University and is a member in good
standing with the Association of Professional Engineers and Geoscientists of British Columbia. Mr. Gray has worked
extensively as an exploration geologist in the Mineral Exploration Industry in Canada, the United States, Asia and
Central and South America for the past 14 years, concentrating on base metal, precious metal and uranium exploration.
Additionally, Mr. Gray served as President and COO of Doublestar Resources Ltd. until it was acquired by Selkirk
Metals Corp. in July of 2007. Currently the principal of Paul D. Gray Geological Consultants, he sits on the Boards of
Alston Ventures Inc., Cloudbreak Resources Ltd. and Geo Minerals Ltd.
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YANAMINA –Terms of agreement
Coronet will transfer 100% of its interest in Yanamina (Coronet's Peruvian subsidiary) to Argus for
the following:
40% of Argus shares following closing of the sale (ie. If Argus presently has 7.9 M shares I/O, it will issue just under 5.4
M shares to CRF)
The shares issued at closing will be subject to the following release:
1/3 released on the earlier of 1 year anniversary of sale, or upon signing of a production agreement with the 'relevant'
communities
1/3 released on the earlier of start of construction of the mine and mill (if required) or 3 years of sale
1/3 released on the earlier of commencement of production or 5 years of sale
Coronet will further have a right to invest up to 40% of any future equity offerings up to the earlier of the commencement of
production or 5 years
Should there arise an issue (in the view of an independent arbitrator) that arises beyond Argus' control that precludes Argus
from proceeding with production, Argus shall have the right to exchange its interest in Yanamina for any Argus shares
remaining in escrow with CRF.
Furthermore, should Argus not secure the approval of the relevant communities within a period of 3 years, Coronet will have
the right to exchange its escrowed shares for the original interest in Yanamina.
CRF shall have the right to appoint 2 Directors to the Board of Argus for 5 years OR until CRF divests until Argus shares to
hold less than 20% of issued and outstanding stock of AML.
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Yamamina
Additional flow through obligations from Coronet
The contingent consideration on the acquisition of Coronet Peru will be paid in the following manner:
Production Bonuses
• US $1.5 million (in cash) payable within 5 days of commencement of construction.;
• US $1 million in common shares (the "gold pour shares") based on the 30 day volume weighted average price of the
Company's common shares prior to the date of issuance payable within 5 days following the initial gold pour;
• US $2.0 million payable within 5 days of the 12 month anniversary of the initial gold pour;
• and US $2.0 million payable within 5 days of the 24 month anniversary of the initial gold pour.
Resource Development Bonuses
• A bonus of US $1.0 million payable at the time the inferred resource exceeds 275,000 ounces gold;
• In addition to the purchase consideration, the Company will issue to Latin Gold, common shares valued at US $2.5
million within 5 days of confirmation of an inferred resource equal to or greater than 250,000 ounces of gold within the
Yanamina Deeps Exploration Target. (The Yanamina Deeps Exploration Target is an undrilled potential footwall
extension to the existing Yanamina resource.)
Royalties
• Latin Gold will also hold an overriding 1.0% gross royalty on all production in excess of 200,000 ounces gold.
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